Advisors tell Cabinet not to make childcare virtually free for everyone

Two of the Cabinet's key advisory bodies have come out against the Cabinet's plan to make daycare and after school care virtually free for everyone. The plan will actually increase inequality of opportunity, and does little to ensure that more adults are able to enter the workforce, said the Netherlands Institute for Social Research (SCP) and the Bureau for Economic Policy Analysis (CPB). A system that mainly includes support for lower income households and also for those who are unemployed would be more helpful, they said. In the summer months, Social Affairs Minister Karien van Gennip of Social Affairs plans to examine a series of important reports she has received about the renovation of the childcare system.

The SCP also criticized the increasing inequality of opportunity last year, but now, together with the CPB, the organization also looked at other aspects of the plan, including its economic impact. One of the Cabinet's goals is to finance 96 percent of childcare for working people as a way to get more parents into work. But the research agencies have calculated that the plan will only increase the number of people working by 0.2 percent.

The plan scored even worse for making increasing equality of opportunity, another stated goal. Childcare would become more expensive due to the rising demand, so that people with low incomes in particular would not be able to pay the few percent leftover for the remaining personal contribution. It is precisely their children who benefit the most from childcare, according to the study. They are also by no means always dual-income families. which is necessary to qualify for the more favorable scheme. According to the researchers, it would be better if that requirement disappeared.

Egbert Jongen, who leads labor programs for the CPB, said that labor participation in the Netherlands is already high. More can be gained by making it possible for part-timers to work more hours. Making childcare free has little influence on this on its own, Jongen said.

The researchers were pleased with the Cabinet dropping one aspect of the scheme, where households would receive advance payments to cover childcare costs. Having to repay large sums of childcare benefits led to the benefits scandal in recent years, a scandal which ultimately caused the third Cabinet of Mark Rutte to resign. With a view towards equal opportunities, the CPB and SCP consider it important to keep the government contribution to childcare income-dependent, and see a role for a third party in this. The Cabinet must then determine the government contribution for families, without having to work with risky advances.

Initially, the plan was to make childcare virtually free for working parents of young children starting in 2025, but the Cabinet is now aiming for 2027. This is due to major staff shortages needed to implement the plan, including a shortage of labor within the childcare sector.

Several organizations responded to the CPB and SCP criticism, calling for an end to the requirement that only working parents should qualify for the generous childcare benefit scheme. The labor requirement means the children of non-working parents will be left behind.

"While research shows that the positive effects of childcare, such as cognitive and social-emotional development, mainly occur in children of parents with a relatively low income," the organizations said in a joint statement. It was signed by labor union FNV, along with Women Inc., SvWO, an association advocating for working parents and BMK, an association pushing for a more socially responsible childcare system.

"A promising start by playing and developing together with peers in the language-rich environment of childcare should not depend on your parents' income or work. The abolition of the childcare allowance and replacing it with income-independent direct financing is a very good step, but the labor requirement makes the system unnecessarily complicated, especially for parents with a flexible income such as self-employed persons or flex workers," said Loes Ypma, the BMK chair.

The advice from all sides, including the critical report from the SCP and CPB, provide "valuable building blocks" for the design of the new system, according to Social Affairs Minister Karien van Gennip. After the summer, the Cabinet will announce its updated proposal for how the new childcare system will be set up.

On Wednesday, Van Gennip sent several studies to the Tweede Kamer about the expected effects of the Cabinet plan to make childcare nearly free. Organizations that may be involved in the implementation of the new system, including government bodies, have also looked into possible implementation problems.

In a debate that Van Gennip had with the members of the Tweede Kamer, the lower house of Parliament, she indicated that the delayed introduction of the new system will not lead to a change in approach, or the cancellation of the Cabinet's plan make childcare practically free from 2027. "We are not going back to the drawing board now," said the minister.